The position of California's small and medium-sized enterprises (SMEs) as important contributors to the state's balance of trade is threatened by recent changes in the broader trade environment. These changes include elimination of state programs to provide public assistance to promote exports, along with changes in the trade and regulatory environments of the SME.

But California's small business community can still be competitive if it begins to focus energies on building excellence into its supply chain logistics processes. While developing an effective global supply chain logistics capability, e.g. meeting precise delivery times, reducing inventory to sales ratios, providing total landed cost quotations, is challenging for the typical SME with limited experience in cross-border trade, there is reason to be optimistic.

Judging from the experience of a few small U.S. firms that are beginning to understand that product quality and supply chain capacity are two sides of the same coin, global sales can expand and costs contained through well planned logistics strategies. This paper tells us why the State of California should reopen a version of its trade and investment office that was closed in 2003.

This time, though, instead of focusing almost exclusively on product promotion, the new office should assist SMEs in developing logistics processes appropriate for their various product lines. Such a program would help insure that thousands of the state's best companies remain competitive long into the 21st century.